For states without generic rules, bubble schemes must still be treated as SIP revisions which, to become effective, must be submitted to, and approved by, EPA on a case-by-case basis. 47 FR 15079. The record does not show that Louisiana has EPA-approved generic SIP rules in place.3 Accordingly, I must conclude, based on the record, that bubble schemes for Louisiana sources, such as the one in question here, must be submitted to EPA for approval on a case-bycase basis before they can become effective.

For all the foregoing reasons, the presiding officer was correct in holding that despite Louisiana's approval the bubble scheme was ineffective, without EPA's approval, as an offset against the emissions from American Cyanamid's storage tanks.

$120 Noncompliance Proceedings Are Not Barred Pending EPA's Determination of Whether or Not to Approve a Bubble Scheme Despite EPA's Exceeding the 4 Month Time Limit Imposed Under the CAA For Making Such Determinations.

American Cyanamid states that the State of Louisiana submitted the bubble scheme in question to EPA for review and approval as a SIP revision over three years ago. American Cyanamid points out that had the Agency acted favorably on the bubble and approved it within the four month deadline required by the CAA for Agency

3 In its appellate brief American Cyanamid argues that the federal register notice announcing the Agency's approval of New Jersey's generic rules (46 FR 30552) somehow allows bubble schemes for Louisiana sources to become effective without EPA approval. As is clear from the language below, the federal register notice announcing the Agency's approval of New Jersey's generic rules applies only to bubble schemes for New Jersey sources developed under New Jersey's EPA-approved bubble rules: I. Need for SIP Revisions

EPA proposed not to require that each bubble developed under
the New Jersey bubble rules be submitted to EPA as a SIP revi-
sion. EPA's basis for this proposal was that the state rules in-
volved tightly drawn mechanical procedures for VOC bubbles
which ensured that use of the rules cannot interfere with attain-
ment and maintenance of ambient air quality standards. For this
reason, EPA felt that EPA review of such bubbles was unneces-
sary, and so it proposed to exempt the New Jersey rules from
its general policy of case-by-case EPA review. 45 FR 77400-61

After evaluation of the comments, EPA has decided to approve
the New Jersey bubble rules but to defer its response to comments
on other kinds of bubble rules since these are not at issue in
this rulemaking. (46 FR 20552) (Emphasis added.)

review of SIP revisions,4 EPA need not have issued a notice of noncompliance since the EPA-approved bubble would offset the emissions violations charged in the notice.5 In that regard, American Cyanamid characterizes Duquesne Light Co. v. EPA, 698 F.2d 456 (1983), as holding that noncompliance proceedings, such as the one held before the presiding officer here, are barred "during any period in which EPA unlawfully fails to act [i.e. fails to act within the four month period required in the CAA] on a SIP revision and thereby effectively prevents the source from achieving compliance." TR p. 37; American Cyanamid Trial Brief, p. 2.

In her initial decision the presiding officer found that American Cyanamid mischaracterized the holding in Duquesne. In that regard she stated:

A reading *** of the opinion in Duquesne reveals
*** not that a noncompliance proceeding is barred
during a period when EPA has exceeded the statu-
tory period for acting upon a SIP revision, but that
any noncompliance penalty should be held in abey-
ance pending final action [on the SIP revision].

Initial Decision p. 11 (Emphasis added).

I agree. The court in Duquesne directed that the Agency develop a new regulation providing "that after the statutory deadline for acting on a SIP revision passes, the noncompliance penalty is held in abeyance pending final action on the SIP by EPA. Should EPA ultimately reject the SIP, the penalty should be calculated back to the deadline, with interest." (Emphasis added.) Duquesne p. 472.

I note that the Agency has recently promulgated the regulation required by the court in Duquesne. 50 FR 36732 (September 9, 1985). The new regulation (and its preamble) lends further support to the fact that the Duquesne holding was intended to address abatement of noncompliance penalties, rather than abatement of noncompliance proceedings, in cases of late-approved SIP revisions. In that regard the preamble states:

4 See CAA § 110(a)(2); Duquesne Light Co. v. EPA, 698 F.2d 456, 471 (1983). But see USA, et al. v. National Steel Corp., No. 83-1600, Slip op. at 12 n. 1 (6th Cir. July 26, 1985).

5 EPA issued its notice of noncompliance after the four month deadline date had passed.

EPA believes that the Duquesne court was primarily
concerned with ensuring that any EPA delay in act-
ing on SIP revisions not result, unfairly, in larger
penalty amounts in the case where (i) EPA eventually
approves a revision to an applicable SIP and (ii) the
source is in compliance with the revised SIP.6

(50 FR 36733) (Emphasis added).

For all the foregoing reasons, the presiding officer's holding that the noncompliance proceeding is not barred by the holding in Duquesne is affirmed.

THE APPROVABILITY ISSUE

In the proceeding before the presiding officer, American Cyanamid requested a ruling that the SIP revision (i.e. bubble scheme) "should or would ultimately be approved" by EPA. In an Order dated April 10, 1985, the presiding officer denied American Cyanamid's request and ruled that "[t]he approvability (fn. omitted) of a submitted proposed [SIP] revision cannot be determined by this [noncompliance] proceeding."7 American Cyanamid appeals that ruling here.

Whether a SIP revision is approvable depends upon whether or not it meets the detailed, complex list of requirements set forth in § 110(a)(2) of the CAA, which are designed to ensure the attainment and maintenance of air quality standards. That determination is for the Agency to make in an informal rulemaking proceeding under § 553 of the Administrative Procedure Act (APA), 5 U.S.C. $553;8 it is not a determination for an Administrative Law Judge to make during the course of a noncompliance proceeding that is strictly adjudicatory under § 554 of the APA.9

6 As the preamble goes on to explain the Agency found it unnecessary to follow the strict letter of the Duquesne holding and adopt a penalty abatement approach in the new regulation. Rather, for the reasons fully explained in the preamble, the Agency included a so-called "reconciliation" approach in the new regulation. Under this approach a source which is in noncompliance due to a late-approved SIP revision would pay the penalty and have the right to a rebate of the penalty plus interest in the event that the SIP revision is ultimately approved.

7A finding of "approvability" would have enabled American Cyanamid to argue that the bubble offset the tanks' emissions based on equitable principles since EPA "should or would" ultimately approve the bubble.

8 Under informal or "notice and comment" rulemaking American Cyanamid would have ample opportunity for comment before the Agency takes action on the SIP revision in question (i.e., the bubble scheme).

9 See Buckeye Power, Inc. v. EPA, 481 F.2d 162 (6th Cir. 1973).

For all the foregoing reasons, American Cyanamid's appeal of the presiding officer's initial decision is dismissed. 10

So ordered.

10 On September 13, 1985, American Cyanamid requested leave to file a reply brief. The reply brief was submitted with such request. American Cyanamid's request to file its reply brief is granted; the reply brief was considered in rendering this final order.

IN THE MATTER OF ALASKA PULP CORPORATION

NPDES No. AK 000053-1

ORDER DENYING REVIEW

Decided October 4, 1985

Before the Administrator, U.S. Environmental Protection Agency

Opinion by Louise Doherty Jacobs, Judicial Officer:

A second notice of Appeal and Petition for Review has been filed by Alaska Pulp in this matter, pursuant to 40 CFR § 124.91(a). It seeks reversal of partial denial by the Regional Administrator in June 1985 of an evidentiary hearing.

The hearing was sought by Alaska Pulp on 49 overlapping issues involved in the Regional Administrator's denial of a fundamentally different factors variance and her reissuance of an NPDES permit for Alaska Pulp's pulp mill in Sitka, Alaska. A consolidated hearing was granted on most of the issues, but six of them were rejected on grounds that they are not material to the variance or reissuance.1 The rejected issues are set out by Alaska Pulp as follows:

1. To what extent, if any, did EPA's Washington Office attempt to influence Region X's decision and what impact did this have on Region X's decision?

In an earlier decision by the Regional Administrator, additional issues proposed by Alaska Pulp were rejected on different grounds. One not appealed has been raised with the Court of Appeals for the Ninth Circuit. A second received de facto acceptance when the hearings were consolidated, since it had been denied for one hearing, but accepted for the other. Others were denied by the Regional Administrator, on grounds that they were legal issues reserved for decision by the Administrator. These were remanded to the Regional Administrator for hearing in April, 1985. See Judicial Officer Order of Remand, May 15, 1985.